As soon as the festive season starts, many companies are offering various offers to the customers. In such a situation, credit card holders are given better discount offers especially for those who pay on EMI. It also becomes easier for customers to buy goods on EMI. But in such a situation, the chances of being overcharged also increase. So, before using a credit card, you need to take care of some special things.
What are the benefits of using credit card EMI?
The biggest advantage of credit EMI is that customers can purchase expensive items in easy installments. You can pay this fee in small installments. For the convenience of the users, the repayment period ranges from a few months to 1-2 years.
How Credit Card EMIs Work
Credit card EMIs can be initiated in two ways. The first method is to purchase goods through direct EMI. In the second method, you can divide the total credit card expenditure into EMIs. But for that, you have to remember that you have to pay interest on that amount.
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The determination of this interest also depends on the customer’s credit score. So keep in mind that processing fees and late payment penalties may apply.
Apart from this, companies sometimes also offer the facility of no cost EMIs to the customers. But for this you need to choose a fixed duration (tenure). If you choose a longer term, you will have to pay more interest. So, while choosing EMIs, pay attention to the interest rate as well.
Flat rate method
As the loan amount continues to be repaid, the amount of each interest is calculated based on the principal amount. To calculate the EMI, the principal amount of the loan and the total amount of interest are added. This amount is then divided by the total number of months in which the loan will be repaid. This is called flat rate strategy. It is mostly used for personal and auto loans.
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